Dear all
What will be the impact if an organisation employs contract labour without proper registration certificate as per the contract labour (Regulation and abolition act).
I come across a situation where an organisation has employed contract labour without proper RC, Contract workmen is claiming for permanency from the principal employer when the organisation stopped the services of the contractor from whom the contract workmen was employed.
I would appreciate to receive the valuable input from the senior members.

From India, Pondicherry
Seasoned Ir Professional
Partner - Risk Management
Asso.prof.(commerce & Management)


Non registration will not give the contract labour any benefit of automatic absorption in to principal employer's rolls unless the contract was sham. Certainly, if the arrangement with the contractor was just for name sake, or sham one, then the workers can claim regularisation. If you have been engaging the workers in works of perennial nature or in the core activities of the business which could have been carried out by employing regular employees, then their claim for regularisation will be maintainable inn law. Similarly, being the principal employer if you have been exercising substantial control over these workers by way of deciding their wages, sanctioning them leaves, taking disciplinary action against them etc, then also it will be deemed that contract is just for name sake or a wind screen. Please follow similar discussions on the same issues in the following link.


Madhu.T.K: Contract Labour


From India, Kannur

While absence of the license / registration are not direct grounds for workers getting permanent status, these are often taken into account by the courts in deciding whether the contract is a sham. The courts look at it like - why have you not registered ? You must have things to hide, which is the fact that you don't want your contract scrutinised. Looks like workers are right.
You need to speak to a good lawyer to defend your self in the court. a lot depends on how good your lawyer is

From India, Mumbai

These kinds of instances we see very often in our industries both in private sector and in public as well. This has been an immortal problem which I would say going to remain so. Claim of permanency is always there right from day one and the tug-of-war continues despite court rulings. Recent instances we have seen is "Neyveli Lignite Co." a CPSU major which employs over 12000 contract workers in regular operations and they are fighting for absorption armed with SC ruling over this issue but the fight/negotiation going on endlessly despite 'strike' for over 45 days. Though they have reached some interim arrangement the issue has not been sorted out totally despite SC judgment on their claim. I have no information of any firm has been penalized for not complying with the orders of courts for absorption. So permanency question is a vexed problem with no concrete solution. Similarly unregistered contract employment also has not stopped yet though there are penal provisions in the statute. And having heard our PM's comment on "Inspector Raj" this menace is expected to continue for ever and ever. If Inspectors are reduced or abolished who will inspect and frame them for violations or erring firms ? Going to be tough days for labour class.
From India, Bangalore

Dear Kumar,

I have commented on this just today but the relevance is here, so I will repeat.

What has 60 years of inspector raj achieved ?

How many companies were punished or made to stop using contract labour for main production work due to inspectors visits.

The reality is that all the inspector raj achieved, was enrich government employees and perpetuate the problem. To that extent at least Modi government move is in the right direction. Remove what is only used for harassment.

However, you need to understand what the government actually said. They didn't say inspections and location visits are now banned or completely illegal / invalid. What they said instead is that the individual inspector is no longer at Liberty to visit any factory he wants when he wants. The chief inspector (or chief commissioner) will decide which factory is to be inspected, when and by whom. The report must be submitted (monitored through the portal / server) within specified deadline and the report available to the concerned stake holders.

Som it will be like income tax. It's not that income tax raids can't happen or don't happen. But it's not a call each indivusual income tax officer takes. It's decided by a very senior officer when and where the raid will take place.

From India, Mumbai

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